Healthcare sector a market standout
AUSTRALIA’S healthcare companies are the true stars of the stockmarket, outperforming popular sectors such as mining and banking over the long term, according to a new study.
And Australian health stocks also outshine the global healthcare sector, which itself is a star performer — outpaced only by the burgeoning technology industry in recent years, according to analysts at investment bank UBS.
In a report for investors, David Cassidy and Dean Dusanic say healthcare was the “long-term standout” on the Australian Securities Exchange across five, 10 and 20year time frames.
It forecasts growth in earnings per share of 10 per cent in coming years.
But the analysts caution that risks attached to the sector are growing amid a rapid run-up in stock prices.
Major companies in the ASX 200 healthcare sector include the flag bearer for Australian biotechnology — blood products and vaccines group CSL — hospital operators Ramsay Health Care and Healthscope, and bionic ear maker Cochlear.
The UBS study says that over the past 20 years, the listed Australian healthcare sector has chalked up a total return of 14 per cent a year.
Over 10 years, which takes in the impact of the global financial crisis, the annual return averages 12 per cent. The five-year return averages a dazzling 19 per cent.
The only sector that has performed better globally is technology, led by Apple and Google parent Alphabet.
Shares in Cochlear hit a record high $161.98 yesterday.
Mr Cassidy cautioned that healthcare investors needed to show some caution, with stock prices under pressure.